New York September 27 2022: The S&P 500 (.SPX) fell to its lowest level in almost two years on Tuesday on worries about super aggressive Federal Reserve policy tightening, trading under its June trough and leaving investors appraising how much further stocks would have to fall before stabilizing.
Stocks have been under pressure since late August after comments and aggressive actions by the U.S. Federal Reserve signaled the central bank’s top priority is to stamp out high inflation even at the risk of putting the economy into a recession.
The S&P 500 was last down 0.6% at 3,632.
After the benchmark index fell more than 20% from its early January high to a low on June 16, which confirmed that the retreat was indeed a bear market, the S&P then rallied into mid-August before running out of gas.
That bear-market rally is now over.
“As long as the Fed continues to raise rates, and investors don’t anticipate an end of the rate hikes, I think this market is going to continue to be weak,” said Tim Ghriskey, Senior Portfolio Strategist, Ingalls & Snyder, New York.
The big blow for the index that re-ignited selling pressure was Fed Chair Jerome Powell’s speech at Jackson Hole that confirmed the Fed’s resolve to fight inflation, followed by a third straight 75 basis point interest rate hike by the central bank last week. The index has tumbled more than 12% since Powell’s speech and has shown little signs of stabilizing.
Many analysts had looked at 3,900 as a strong technical support level for the index. That gave way 11 days ago under four straight days of selling.
